Technical Analysis: The Phillip 20 – September Monthly Review October 6, 2017

  • Take Profit: Mandarin Oriental USD
  • Stop Loss: Moya Asia
  • Cumulative returns up to September is 9.68% with a realised gain of 1.36% in September
  • STI still range bound between the 3274 range high and 3195 range low

September was yet another month bogged down with the never-ending Korea war scare as the US and North Korea exchanged heated words. Ri Yong Ho, foreign minister of North Korea, stated that President Trump had declared war on North Korea and Pyongyang reserved the right to take countermeasures such as shooting down US bombers even if they are not in its airspace. This came after the US B1-1B bombers escorted by fighters flew east of North Korea in the aftermath of more sanctions imposed on them.

Not surprisingly, the Straits Times Index (STI) remain depressed due to the escalating tensions between North Korea and the US. The STI was down -1.75% in September, and the price action suggests further downside if the 3189 critical support area gives way. Our bearish view from the last report remains valid as price continued to test the 3189 critical support area.

STI Daily Chart – Stuck in a range between 3274 range high and 3195 range low

1

Source: Bloomberg, PSR

Red line = 20 period moving average, Blue line = 60 period moving average, Green line = 200 period moving average

On the daily timeframe, more signs of weakness appeared after the 20-day moving average crossed below the 60-day moving average on 7 September while the 3195 critical support area held up once again proving its significance. However, there was a bullish break above the immediate downtrend line and 20/60 day moving average on 2 October, but the follow through was underwhelming. We might see a range bound action between the 3274 range high and 3195 range low moving forward. Watch the range extremes closely as the breakout will dictate the next course of action.

Keep in mind the weekly RSI is still in the midst of mean reversion off a recent overbought peak of 72 in July. Moreover, the average correction that follows after the overbought RSI mean reversion tends to drag the STI down by -7.7% suggests a bearish bias here.

2

Losers

With the STI moving sluggishly, not much action has been going on in the “Phillip 20 Portfolio.” We closed out the position in Moya Asia earlier in the month due to the bearish price action around the prior downtrend line. As a result, the “Phillip 20 Portfolio” was dragged down by -1.71%.

Winners

Only one trade was closed out with a profit in September. We decided to close out Mandarin Oriental USD on 19 September with 28.92% gain due to the ongoing bearish price action.

New Entries

SPH, Jumbo and Singapore O&G were added into the “Phillip 20 Portfolio” in September with more of a bottom picking approach for these entries.

3

Watchlist

After a major reshuffling of the portfolio, there are currently 18 stocks within the “Phillip 20 Portfolio.” The following is the revised watch list that we are closely monitoring:

43.5

 

4

Comments

Be the First to Comment!

avatar
wpDiscuz

About the author

Profile photo of Jeremy Ng

Jeremy Ng
Investment Analyst
Phillip Securities Research Pte Ltd

Jeremy specialises in Technical Analysis and has 10 years of experience in studying price action. His areas of expertise include intermarket analysis on the equities, currencies, commodities and bonds market.

He graduated with a Bachelor of Science in Banking and Finance from University of London.

Get access to all the latest market news, reports, technical analysis
by signing up for a free account today!